It's been 22 years since Massachusetts passed the Electric Industry Restructuring Act, which forced utilities to divest their ownership in power plants and created a system of competitive wholesale power markets.

In 1997, lawmakers bet that breaking up utility monopolies and creating separate channels for power generators, transmission owners, and distributors would harness the power of competition to deliver abundant electricity to consumers at the least possible cost.

Have competitive markets stood the test of time? And can they survive as our power system transforms from one dominated by large power plants into a clean, hybrid distributed network?

Speaking with reporters on Wednesday, ISO New England President and CEO Gordon van Welie vouched for competitive markets, saying that more than two decades they have reduced wholesale power prices and spurred $16 billion in efficient investment.

But he said markets are becoming increasingly complicated as the grid welcomes resources such as solar and wind, battery storage, demand response, and energy efficiency.

"The ISO is facing increasing complexities in operating the grid with a shifting resource mix, and in maintaining markets that are truly competitive while accommodating public policy goals," he remarked during his State of the Grid 2019 presentation.

ISO New England, formed in 1997, is the non-profit "independent system operator" which runs the region's wholesale power markets, oversees the high-voltage transmission system, and operates the six-state power grid.

Van Welie said the grid is rapidly transforming from the old model, based upon large power plants, to a hybrid system where utility scale renewables, distributed renewables, advanced battery storage, and energy efficiency all compete for the right to participate in wholesale markets.

At the same time, many coal, oil, and nuclear plants have retired in the face of competition from natural gas generation. While gas plants have benefited from the fracking boom, their access to fuel during the coldest days is not always assured due to New England's pipeline constraints. As such, plants that store fuel on site, including oil generators and nuclear plants, remain important for security reasons, according to van Welie.

"Energy security risk is the top challenge to power system reliability in New England," van Welie said, while defining energy security as the ability to procure fuel when needed, particularly during periods of scarcity.

The region's power mix is poised for a major change, with a potentially huge influx of offshore wind and other renewables in the coming years. Combined with fuel security risks, power markets faces a dual challenge.

The CEO said 2018 has been a big year at ISO New England for crafting and implementing market mechanisms to deal with both state-sponsored renewables and fuel security issues.

For instance, a new "pay for performance" rule rewards successful performance when the grid is under stress. Separately, the ISO launched a first-in-the-nation, two-part competitive auction pathway for renewable resources that enjoy state-sponsored contracts.

Such renewables, which are valuable to states eager to meet their climate goals, can artificially suppress wholesale prices, creating an uneven playing field and potentially threatening the viability of other needed resources, van Welie said.

Currently, within its real-time power markets, the ISO dispatches "least cost" resources first, regardless of their carbon footprint or fuel security value. In contrast, rules for the separate "forward capacity market" have recently been amended to add incentives for certain attributes.

Van Welie said there is currently no market mechanism to keep certain large generators on line for security reasons, but that the ISO is working with stakeholders to develop such rule-based incentives.

For instance, Mystic Station, one of the largest power plants in New England, last year announced plans to retire in 2022. The ISO determined that the loss would pose unacceptable risk to regional fuel security. Interim tariff language was put in place allowing for a delay in the retirements.

Now the ISO is working on "an innovative, market-based mechanism that will place a value on energy security." The multi-day-ahead energy market would be the first of its kind in the nation.

In another case, three remaining nuclear units -- Pilgrim in Massachusetts, Millstone in Connecticut, and Seabrook in New Hampshire -- provide a third of New England's power. Yet, policies geared toward renewables don't value nuclear power's carbon-free attributes, placing the plants at potential economic risk.

"The loss of these (nuclear power) resources ... would set the states' clean-energy goals back, put upward pressure on prices, and worsen the region's energy security risks," van Welie said.

One simple solution -- carbon pricing -- would solve the problem, van Welie opined, while noting that state and federal lawmakers have taken no steps to enact such a policy.

"Establishing a realistic price on carbon would be an elegant and simpler way to achieve clean-energy goals through the markets without distorting competition," he said.

The ISO is committed to being "fuel neutral and technology neutral," van Welie added. He said demand for electricity in New England is expected to remain flat, at least in the near-term.

In response to a question from the press, van Welie said the ISO is now presuming that no new natural gas pipeline capacity will be built in New England. Attempts to build such pipelines have been vehemently opposed by landowners and environmental groups.

"We have to operate with what we have," he said. Liquefied natural gas shipped in on tankers has helped natural gas plants get through deep cold spells, van Welie remarked.

Despite challenges, the grid is in good shape and benefits from a robust transmission system, competitive markets, adequate resources, a history of reliability, and collaborative decision-making involving a range of stakeholders, the CEO said.

"New England's power system is operating from a strong foundation," said van Welie. "The history of New England's power system for the last two decades is a history of working together to adapt and evolve as the industry has changed."